Trading Rules to Live and Die by

Those of you that have participated in any of my training classes will be familiar with the following statement. “Don’t trade unless it’s as easy as going across the room to pick money up off the floor.” I am only passing on what I have heard other places, and now apply to my trading.

Trading too often can be as dangerous as trading to many lots. Just because you are in the market doesn’t mean you will make money. Throwing mud at a wall only gives you a wall covered in mud. Make sure that the trades you take are the high-quality trades you want.

You can do this by knowing two things, your trading strategy, and your personal tendencies. Most people over trade out of frustration. A “Well that didn’t work what about this” mentality will kill you. Knowing your strategy will get you half way there. Set your strategy in stone and stick to it.

If you know you have a hard time opening a trade, automate it. If you know you have a hard time staying in a trade long enough to realize its potential, open the trade and walk away from the computer until it closes one way or the other. Make sure your strategy works around your idiosyncrasies.

Setting goals in trading can be a tricky thing. It isn’t that you can’t set them; it’s that achieving them can be very difficult, and the first rule of setting goals is to initially set goals that can be achieved easily. Doing this helps build a base on which future success can rest.

The first goal that most people make when they start trading is a dollar goal. This of course is the most difficult type of goal to achieve. The trader doesn’t have any control over the market. You may set a goal to make $5000 this month, but if the market doesn’t produce the trades to reach that point, you have failed in reaching that goal. Read this helpful guide on how to find the best broker to trade with.

Instead of setting goals you have no control over, set goals that you have total control over, and let the rest come. Here is a great goal that is easily achieved and can produce astounding results.

“I will take every trade set up that meets my trading strategy’s criteria.”

This goal can be measured and analyzed. You can look back over the week, month, quarter or whatever time period you want to, and easily measure your success or failure. It also leads into other quantifiable results. If you took every trade that your strategy called for and you consistently lost money then you know you need to adjust your strategy.

Setting goals and achieving them will be the second most profitable thing you can do in trading. The first is always a journal.